European price erosion, reduced hospital beds, a shortage of radiologists and the push towards multi-modality deals, as well as overall shift to digital (including PACS installations), are bringing growth to the European medical imaging market, according to analysis by Frost & Sullivan. Thus, the research firm claims, the stage is set for increased consolidation in the market which could mean that larger facilities may not have the certainty the used to have in dominating smaller competitors.
“Consolidation in the medical imaging industry in Europe will be driven by a continued movement towards complete digitization of the radiology department and workflow integration through PACS,” said Frost & Sullivan Research Analyst Arun B. Karthik. “The need to reduce costs and, at the same time, maintain the high standards of quality expected from medical imaging equipment will further influence the trend towards consolidation.”
The trend will be consolidation, but at the same time certain realities will make this difficult. Over the past three years, alliances and acquisitions within the industry indicate a move towards vertical integration, according to Frost & Sullivan. Also, many providers seek to integrate or align with independent PACS developers as well as sub-system producers which could continue for another three years, the firm said.
However, these consolidations will have the hurdle of strict legislation, cultural integration, change management as well as certain reimbursement rules that could hamper consolidations, Frost & Sullivan said.
“The increasing trends towards price reduction is minimizing the bottom lines for companies,” said Karthik. “In addition, regulatory policies such as reimbursement rules that restrict the use of certain modalities in favor of others also have a strong impact on consolidation.”
For success, market participants will need to enter into mutually beneficial partnerships which can help them broaden their product portfolio rather than increase their market share, according to Frost & Sullivan.
“By expanding their product portfolio, smaller companies can hope to actively compete with the larger multi-modality vendors,” added Karthik. “With the growing trend towards institutions offering large multi-modality tenders, vertical integration will also help to reduce costs and provide a more efficient deliverable.”